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C. State immunity

1. CONCEPT

The State may not be sued without its consent. (Section 3, Article XVI, 1987 Constitution)

The immunity of the State from suit, known also as the doctrine of sovereign immunity or non-suability of the State, is expressly provided in Article XVI of the 1987 Constitution which states: Section 3. The State may not be sued without its consent. (Arigo v. Swift, G.R. No. 206510, 16 September 2014)

The immunity of the State is also referred to as the doctrine of the royal prerogative of dishonesty” because it grants the state the prerogative to defeat any legitimate claim against it by simply invoking its non-suability. (Department of Agriculture v. NLRC, Salcedo, G.R. No. 104269, 11 November 1993)

The rule that a state may not be sued without its consent, now embodied in Section 3, Article XVI of the 1987 Constitution, is one of the generally accepted principles of international law, which we have now adopted as part of the law of the land. (DOH v. Phil. Pharmawealth, Inc., G.R. No. 169304, 13 March 2007)

The State may not be sued without its consent. This fundamental doctrine stems from the principle that there can be no legal right against the authority which makes the law on which the right depends. This generally accepted principle of law has been explicitly expressed in both the 1973 and the present Constitutions. (DOTC v. Sps. Abecina, G.R. No. 206484, 29 June 2016)

In a republican state, like Philippines, government immunity from suit without its consent is derived from the will of the people themselves in freely creating a government “of the people, and for the people” – a representative government through which they have agreed to exercise the powers and discharge the duties of their sovereignty for the common good and general welfare. In so agreeing, the citizens have solemnly undertaken to surrender some of their private rights and interest which were calculated to conflict with the higher rights and larger interests of the people as a whole, represented by the government thus established by them all. One of those “higher rights,” based upon those “larger interests” is that government immunity. (METRAN v. Paredes, G.R. No. L-1232, 12 January 1948)

1) The 2 concepts of sovereign immunity

There are two conflicting concepts of sovereign immunity, each widely held and firmly established. According to the classical or absolute theory, a sovereign cannot, without its consent, be made a respondent in the courts of another sovereign. According to the newer or restrictive theory, the immunity of the sovereign is recognized only with regard to public acts or acts jure imperii of a state, but not with regard to private acts or acts jure gestionis. (The Holy See v. Rosario, G.R. No. 101949, 01 December 1994)

a) For public acts or jure imperii: immunity applies

Over the years, the State’s participation in economic and commercial activities gradually expanded beyond its sovereign function as regulator and governor. The evolution of the State’s activities and degree of participation in commerce demanded a parallel evolution in the traditional rule of state immunity. Thus, it became necessary to distinguish between the State’s sovereign and governmental acts (jure imperii) and its private, commercial, and proprietary acts (jure gestionis). Presently, state immunity restrictively extends only to acts jure imperii while acts jure gestionis are considered as a waiver of immunity. (DOTC v. Sps. Abecina, G.R. No. 206484, 29 June 2016)

The fact that a non-corporate government entity performs a function proprietary in nature does not necessarily result in its being suable. If said non-governmental function, is undertaken as an incident to its governmental function, there is no waiver thereby of the sovereign immunity from suit extended to such government entity. (Mobil Philippines Exploration, Inc. vs. Customs Arrastre Service and Bureau of Customs, En Banc, G.R. No. L-231139, 17 December 1966)

The Bureau of Customs, to repeat, is part of the Department of Finance, with no personality of its own apart from that of the national government. Its primary function is governmental, that of assessing and collecting lawful revenues from imported articles and all other tariff and customs duties, fees, charges, fines and penalties. To this function, arrastre service is a necessary incident. (Ibid.)

Clearly, therefore, although said arrastre function may be deemed proprietary, it is a necessary incident of the primary and governmental function of the Bureau of Customs, so that engaging in the same does not necessarily render said Bureau liable to suit. For otherwise, it could not perform its governmental function without necessarily exposing itself to suit. Sovereign immunity, granted as to the end, should not be denied as to the necessary means to that end. (Ibid.)

An unincorporated government agency without any separate juridical personality of its own enjoys immunity from suit because it is invested with an inherent power of sovereignty. Accordingly, a claim for damages against the agency cannot prosper; otherwise, the doctrine of sovereign immunity is violated. However, the need to distinguish between an unincorporated government agency performing governmental function and one performing proprietary functions has arisen. The immunity has been upheld in favor of the former because its function is governmental or incidental to such function; it has not been upheld in favor of the latter whose function was not in pursuit of a necessary function of government but was essentially a business. (Air Transportation Office v. Sps. Ramos, G.R. No. 159402, 23 February 2011)

b) For private acts or jure gestionis: no immunity

Not all government entities, whether corporate or non-corporate, are immune from suits. Immunity from suits is determined by the character of the objects for which the entity was organized. (Ibid.)

In our view, the CA thereby correctly appreciated the juridical character of the ATO as an agency of the Government not performing a purely governmental or sovereign function, but was instead involved in the management and maintenance of the Loakan Airport, an activity that was not the exclusive prerogative of the State in its sovereign capacity. Hence, the ATO had no claim to the State’s immunity from suit. (Ibid.)

2. PUBLIC OFFICIALS

1) General rule: covered by immunity

While the doctrine of state immunity appears to prohibit only suits against the state without its consent, it is also applicable to complaints filed against officials of the state for acts allegedly performed by them in the discharge of their duties. The suit is regarded as one against the state where satisfaction of the judgment against the officials will require the state itself to perform a positive act, such as the appropriation of the amount necessary to pay the damages awarded against them. (DOH v. Phil. Pharmawealth, Inc., G.R. No. 169304, 13 March 2007)

The suability of a government official depends on whether the official concerned was acting within his official or jurisdictional capacity, and whether the acts done in the performance of official functions will result in a charge or financial liability against the government. (DOH v. Phil. Pharmawealth, Inc., supra.)

2) Exception

It is a different matter where the public official is made to account in his capacity as such for acts contrary to law and injurious to the rights of plaintiff. Inasmuch as the State authorizes only legal acts by its officers, unauthorized acts of government officials or officers are not acts of the State, and an action against the officials or officers by one whose rights have been invaded or violated by such acts, for the protection of his rights, is not a suit against the State within the rule of immunity of the State from suit. In the same tenor, it has been said that an action at law or suit in equity against a State officer or the director of a State department on the ground that, while claiming to act for the State, he violates or invades the personal and property rights of the plaintiff, under an unconstitutional act or under an assumption of authority which he does not have, is not a suit against the State within the constitutional provision that the State may not be sued without its consent.’ The rationale for this ruling is that the doctrine of state immunity cannot be used as an instrument for perpetrating an injustice. (Shauf v. Court of Appeals, G.R. No. 90314, 27 November 1990)

Hence, the rule does not apply where the public official is charged in his official capacity for acts that are unauthorized or unlawful and injurious to the rights of others. Neither does it apply where the public official is clearly being sued not in his official capacity but in his personal capacity, although the acts complained of may have been committed while he occupied a public position. (DOH v. Phil. Pharmawealth, Inc., supra.)

For an officer who exceeds the power conferred on him by law cannot hide behind the plea of sovereign immunity and must bear the liability personally. (Ibid.)

The aforecited authorities are clear on the matter. They state that the doctrine of immunity from suit will not apply and may not be invoked where the public official is being sued in his private and personal capacity as an ordinary citizen. The cloak of protection afforded the officers and agents of the government is removed the moment they are sued in their individual capacity. This situation usually arises where the public official acts without authority or in excess of the powers vested in him. It is a well-settled principle of law that a public official may be liable in his personal private capacity for whatever damage he may have caused by his act done with malice and in bad faith, or beyond the scope of his authority or jurisdiction. (Arigo v. Swift, supra.)

3. WAIVER OF IMMUNITY

The general law waiving the immunity of the state from suit is found in Act No. 3083, under which the Philippine government “consents and submits to be sued upon any moneyed claim involving liability arising from contract, express or implied, which could serve as a basis of civil action between private parties.” (U.S.A. v. Guinto, G.R. Nos. 76607, 79470, 800180, 80258, 26 February 1990)

In Merritt v. Government of the Philippine Islands, a special law was passed to enable a person to sue the government for an alleged tort. When the government enters into a contract, it is deemed to have descended to the level of the other contracting party and divested of its sovereign immunity from suit with its implied consent. Waiver is also implied when the government files a complaint, thus opening itself to a counterclaim. (Ibid.)

a. The 2 kinds of waiver

As the principle itself implies, the doctrine of state immunity is not absolute. The State may waive its cloak of immunity and the waiver may be made expressly or by implication. (DOTC v. Sps. Abecina, supra.

1) Express consent

Express consent is effected only by the will of the legislature through the medium of a duly enacted statute. We have held that not all contracts entered into by the government will operate as a waiver of its non-suability; distinction must be made between its sovereign and proprietary acts. As for the filing of a complaint by the government, suability will result only where the government is claiming affirmative relief from the defendant. (U.S.A. v. Guinto, supra.)

It must be remembered that statutory provisions waiving State immunity from suit are strictly construed and that waiver of immunity, being in derogation of sovereignty, will not be lightly inferred. (Mobil Philippines Exploration, Inc. vs. Customs Arrastre Service and Bureau of Customs supra.)

2) Implied waiver

Where the Department of Transportation and Communications (DOTC) mistakenly encroached on private properties when it constructed the local telephone exchange, it was held that the Department’s entry into and taking of possession of the respondents’ property amounted to an implied waiver of its governmental immunity from suit. (DOTC v. Sps. Abecina, supra.)

The agreement to submit disputes to arbitration is construed as an implicit waiver of immunity from suit. (China National Machinery & Equipment Corp. [Group] v. Santamaria, G.R. No. 185572, 07 February 2012)

b. No automatic liability, in case of waiver


There seems to be a failure to distinguish between suability and liability and a misconception that the two terms are synonymous. Suability depends on the consent of the state to be sued, liability on the applicable law and the established facts. The circumstance that a state is suable does not necessarily mean that it is liable; on the other hand, it can never be held liable if it does not first consent to be sued. Liability is not conceded by the mere fact that the state has allowed itself to be sued. When the state does waive its sovereign immunity, it is only giving the plaintiff the chance to prove, if it can, that the defendant is liable. (U.S.A. v. Guinto, supra.)

4. ALTERNATIVE REMEDIES

a. Expropriation proceedings

The doctrine of sovereign immunity cannot be successfully invoked to defeat a valid claim for compensation arising from the taking without just compensation and without the proper expropriation proceedings being first resorted to of the plaintiffs’ property. Thus, in De los Santos v. Intermediate Appellate Court, the trial court’s dismissal based on the doctrine of non-suability of the State of two cases (one of which was for damages) filed by owners of property where a road 9 meters wide and 128.70 meters long occupying a total area of 1,165 square meters and an artificial creek 23.20 meters wide and 128.69 meters long occupying an area of 2,906 square meters had been constructed by the provincial engineer of Rizal and a private contractor without the owners’ knowledge and consent was reversed and the cases remanded for trial on the merits. The Supreme Court ruled that the doctrine of sovereign immunity was not an instrument for perpetrating any injustice on a citizen. In exercising the right of eminent domain, the Court explained, the State exercised its jus imperii, as distinguished from its proprietary rights, or jus gestionis; yet, even in that area, where private property had been taken in expropriation without just compensation being paid, the defense of immunity from suit could not be set up by the State against an action for payment by the owners. (Air Transportation Office v. Sps. Ramos, supra.)

b. Preliminary Injunction, Mandamus

The rule, however, is not so all-encompassing as to be applicable under all circumstances. The defense of state immunity from suit does not apply in causes of action which do not seek to impose a charge or financial liability against the State… As regards petitioner DOH, the defense of immunity from suit will not avail despite its being an unincorporated agency of the government, for the only causes of action directed against it are preliminary injunction and mandamus. Under Section 1, Rule 5823 of the Rules of Court, preliminary injunction may be directed against a party or a court, agency or a person. (DOH v. Phil. Pharmawealth, Inc., supra.)

5. FOREIGN STATE IMMUNITY

a. Same immunity on jure imperii

The precept that a State cannot be sued in the courts of a foreign state is a long-standing rule of customary international law then closely identified with the personal immunity of a foreign sovereign from suit and, with the emergence of democratic states, made to attach not just to the person of the head of state, or his representative, but also distinctly to the state itself in its sovereign capacity. (Minucher v. CA, Scalzo, G.R. No. 142396, 11 February 2003)

Thus, the principles of state immunity for the Philippine Government likewise applies to foreign state, as well as the rules on jure imperii and juri gestonis.

This Court has considered the following transactions by a foreign state with private parties as acts jure imperii: (1) the lease by a foreign government of apartment buildings for use of its military officers (Syquia v. Lopez [1949]; (2) the conduct of public bidding for the repair of a wharf at a United States Naval Station (United States of America v. Ruiz, supra.); and (3) the change of employment status of base employees (Sanders v. Veridiano [1988]).

b. Covers foreign representatives or agents

If the acts giving rise to a suit are those of a foreign government done by its foreign agent, although not necessarily a diplomatic personage, but acting in his official capacity, the complaint could be barred by the immunity of the foreign sovereign from suit without its consent. Suing a representative of a state is believed to be, in effect, suing the state itself. The proscription is not accorded for the benefit of an individual but for the State, in whose service he is, under the maxim – par in parem, non habet imperium – that all states are sovereign equals and cannot assert jurisdiction over one another. The implication, in broad terms, is that if the judgment against an official would require the state itself to perform an affirmative act to satisfy the award, such as the appropriation of the amount needed to pay the damages decreed against him, the suit must be regarded as being against the state itself, although it has not been formally impleaded. (Minucher v. CA, Scalzo supra.)

c. Procedure in case of foreign state immunity

In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office of the state where it is sued to convey to the court that said defendant is entitled to immunity. (The Holy See v. Rosario, G.R. No. 101949, 01 December 1994)

1) Executive endorsement in PH

In the United States, the procedure followed is the process of “suggestion,” where the foreign state or the international organization sued in an American court requests the Secretary of State to make a determination as to whether it is entitled to immunity. If the Secretary of State finds that the defendant is immune from suit, he, in turn, asks the Attorney General to submit to the court a “suggestion” that the defendant is entitled to immunity. In England, a similar procedure is followed, only the Foreign Office issues a certification to that effect instead of submitting a “suggestion”. (Ibid.)

In the Philippines, the practice is for the foreign government or the international organization to first secure an executive endorsement of its claim of sovereign or diplomatic immunity. But how the Philippine Foreign Office conveys its endorsement to the courts varies. (Ibid.)

In International Catholic Migration Commission v. Calleja (1990), the Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and Employment, informing the latter that the respondent-employer could not be sued because it enjoyed diplomatic immunity. In World Health Organization v. Aquino (1972), the Secretary of Foreign Affairs sent the trial court a telegram to that effect. In Baer v. Tizon (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request the Solicitor General to make, in behalf of the Commander of the United States Naval Base at Olongapo City, Zambales, a “suggestion” to respondent Judge. The Solicitor General embodied the “suggestion” in a Manifestation and Memorandum as amicus curiae. (Ibid.)

In some cases, the defense of sovereign immunity was submitted directly to the local courts by the respondents through their private counsels (Raquiza v. Bradford [1945]; Miquiabas v. Philippine-Ryukyus Command [1948]; United States of America v. Guinto [1990] and companion cases). In cases where the foreign states bypass the Foreign Office, the courts can inquire into the facts and make their own determination as to the nature of the acts and transactions involved. (Ibid.)

d. Guidelines

Certainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an act can only be the start of the inquiry. The logical question is whether the foreign state is engaged in the activity in the regular course of business. If the foreign state is not engaged regularly in a business or trade, the particular act or transaction must then be tested by its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii, especially when it is not undertaken for gain or profit. (Ibid.)

There is no question that the United States of America, like any other state, will be deemed to have impliedly waived its non-suability if it has entered into a contract in its proprietary or private capacity. It is only when the contract involves its sovereign or governmental capacity that no such waiver may be implied. (Ibid.)

In the case of The Holy See who sold a real estate, if petitioner has bought and sold lands in the ordinary course of a real estate business, surely the said transaction can be categorized as an act jure gestionis. However, petitioner has denied that the acquisition and subsequent disposal of Lot 5-A were made for profit but claimed that it acquired said property for the site of its mission or the Apostolic Nunciature in the Philippines. Private respondent failed to dispute said claim. (Ibid.)

The property was acquired by The Holy See as a donation from the Archdiocese of Manila. The donation was made not for commercial purpose, but for the use of petitioner to construct thereon the official place of residence of the Papal Nuncio. The right of a foreign sovereign to acquire property, real or personal, in a receiving state, necessary for the creation and maintenance of its diplomatic mission, is recognized in the 1961 Vienna Convention on Diplomatic Relations (Arts. 20-22). This treaty was concurred in by the Philippine Senate and entered into force in the Philippines on November 15, 1965. (Ibid.)

The decision by The Holy See to transfer the property and the subsequent disposal thereof are likewise clothed with a governmental character. Petitioner did not sell Lot 5-A for profit or gain. It merely wanted to dispose off the same because the squatters living thereon made it almost impossible for petitioner to use it for the purpose of the donation. The fact that squatters have occupied and are still occupying the lot, and that they stubbornly refuse to leave the premises, has been admitted by private respondent in its complaint. (Ibid.)

6. DIPLOMATIC IMMUNITY

As a matter of state policy as expressed in the Constitution, the Philippine Government adopts the generally accepted principles of international law (1987 Constitution, Art. II, Sec. 2). Being a member of the United Nations and a party to the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations, the Philippine Government adheres to the doctrine of immunity granted to the United Nations and its specialized agencies. Both treaties have the force and effect of law. (Lasco v. United Nations Revolving Fund for Natural Resources Exploration (UNRFNRE), G.R. Nos. 109095-109107, 23 February 1995)

It is a recognized principle of international law and under our system of separation of powers that diplomatic immunity is essentially a political question and courts should refuse to look beyond a determination by the executive branch of the government, and where the plea of diplomatic immunity is recognized and affirmed by the executive branch of the government as in the case at bar, it is then the duty of the courts to accept the claim of immunity upon appropriate suggestion by the principal law officer of the government, the Solicitor General or other officer acting under his direction. Hence, in adherence to the settled principle that courts may not so exercise their jurisdiction by seizure and detention of property, as to embarrass the executive arm of the government in conducting foreign relations, it is accepted doctrine that “in such cases the judicial department of (this) government follows the action of the political branch and will not embarrass the latter by assuming an antagonistic jurisdiction. (The World Health Organization v. Aquino, En Banc, G.R. No. L-35131, 29 November 1972)

Immunity is necessary to assure unimpeded performance of their functions. The purpose is “to shield the affairs of international organizations, in accordance with international practice, from political pressure or control by the host country to the prejudice of member States of the organization, and to ensure the unhampered performance of their functions”. Lasco v. United Nations Revolving Fund for Natural Resources Exploration (UNRFNRE), citing International Catholic Immigration Commission v. Calleja, G.R. Nos. 85750, 89331, 28 September 1990)

a. General rule: immune for official acts

In the case of diplomatic immunity, the privilege is not an immunity from the observance of the law of the territorial sovereign or from ensuing legal liability; it is, rather, an immunity from the exercise of territorial jurisdiction. (Arigo v. Swift, supra.)

In United States of America v. Judge Guinto, one of the consolidated cases therein involved a Filipino employed at Clark Air Base who was arrested following a buy-bust operation conducted by two officers of the US Air Force, and was eventually dismissed from his employment when he was charged in court for violation of R.A. No. 6425. In a complaint for damages filed by the said employee against the military officers, the latter moved to dismiss the case on the ground that the suit was against the US Government which had not given its consent. The RTC denied the motion but on a petition for certiorari and prohibition filed before this Court, we reversed the RTC and dismissed the complaint. We held that petitioners US military officers were acting in the exercise of their official functions when they conducted the buy-bust operation against the complainant and thereafter testified against him at his trial. It follows that for discharging their duties as agents of the United States, they cannot be directly impleaded for acts imputable to their principal, which has not given its consent to be sued. (Ibid.)

b. Exceptions

The immunity granted to officers and staff of the Asian Development Bank is not absolute; it is limited to acts performed in an official capacity. Furthermore, we held that the immunity cannot cover the commission of a crime such as slander or oral defamation in the name of official duty. (Liang v. People, G.R. No. 125865, 26 March 2001)

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